Compare the Best Equity Release Rates in 2024

UK equity release interest rates now vary from as low as 5.34% (AER) fixed for life to a high of 7.34% (AER), averaging at about 6.21% across the market. This range reflects differences in lender policies, the borrower's age, and market dynamics, providing valuable insights into how these factors affect the rates on offer. It helps ensure that consumers can identify options that best suit their financial circumstances.
  • Last Updated: 17 Jun 2024
  • Fact Checked Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui
Looking for the Best Rate on an Equity Release Plan? Wondering Which Factors Affect Equity Release Rates and How Interest Rates on Equity Release Work? Find Out Here.
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Key Takeaways
  • In early 2024, UK equity release interest rates fluctuated, with a low of 5.34% APR, a high of 7.34% APR, and typical rates ranging between 5.25% to 6.30%, reflecting market dynamics and individual circumstances.
  • These rates often outpace regular mortgages due to higher lender risk and the loan’s potentially lifelong span, but most UK plans lock in a fixed rate for peace of mind.
  • Your chosen rate directly shapes how fast your debt balloons, impacting how much home equity stays in your pocket.
  • Factors influencing these rates include Bank of England’s base rate, how competitive lenders are feeling, the economic climate, and the mix of your age plus home value.

Equity release rates in 2024 have become more competitive, reflecting the financial industry’s response to homeowner needs. The introduction of rates as low as 2.5% has set a new benchmark for affordability in the sector.

Moreover, providers now emphasize no negative equity guarantees and flexible repayment options. These features ensure that homeowners can access their equity without the risk of debt exceeding their home’s value, enhancing safety and trust in these financial instruments.

In This Article, You Will Discover:

    Did you know that in 2024, the landscape of equity release rates is more dynamic than ever? With rates hitting historic lows, missing out could mean losing thousands. This guide dives deep into the market, ensuring you don’t leave money on the table.

    Keep reading to uncover hidden gems in the equity release market. Discover how to secure the best deal and safeguard your financial future.

    Therefore:

    Who Offers the Lowest Rates in 2024?

    Discover the Lowest Rates & Save

    Request a FREE call back & discover:

    • Who offers the LOWEST rates available on the market.
    • Who offers the HIGHEST release amount.
    • If you qualify for equity release.
    Best Equity Release Interest Rates

    What Are the Equity Release Interest Rates in the UK for 2024?

    Equity release rates in the UK range between 5.20% and 6.30% APR.

    These figures reflect the ongoing market dynamics, lender policies, and individual borrower circumstances.

    Compare the Best Equity Release Interest Rates of 2024

    The best equity release interest rates for 2024 are Pure Retirement’s Age Partnership Classic Flexible Lump Sum 2 leading at 5.25% AER, closely followed by their Age Partnership Classic Flexible Lump Sum 1 at 5.30% AER.

    Here are some of the most competitive rates:

    Provider Scheme Name Monthly
    (Rate)The amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed.
    Annual Equivalent (Rate)The percentage of interest on a loan or financial product if compound interest accumulates over a year during which no payments are made. Annual Percentage (Rate)The number that represents the total yearly costs of borrowing money, expressed as a percentage of the principle loan amount.
    Pure Retirement Age Partnership Classic Flexible Lump Sum 2 5.25% 5.38% AER 5.38% APR
    Pure Retirement Age Partnership Classic Flexible Lump Sum 1 5.30% 5.43% AER 5.43% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (Fee) (AP) (Single) 5.71% 5.86% AER 5.86% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (AP) (Single) 5.78% 5.94% AER 5.94% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (1% Cashback) (AP) (Single) 5.88% 6.04% AER 6.04% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (2% Cashback) (AP) (Single) 5.98% 6.15% AER 6.15% APR
    Aviva Age Partnership Lifestyle Flexible Option, Fixed ERC N/A 6.24% AER 6.40% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (3% Cashback) (AP) (Single) 6.08% 6.25% AER 6.25% APR
    Pure Retirement Age Partnership Sovereign Flex Lump Sum (4% Cashback) (AP) (Single) 6.18% 6.36% AER 6.36% APR
    Just Retirement Age Partnership J1 Lump Sum Fixed ERC (Enhanced) 6.30% 6.49% AER 7.10% APR

    Updated: 05/03/2024

    Scenario: 60-year-old single male with a £300,000 property value, who wants to release £30,000.

    How Does Equity Release Interest Work and What Is Its Impact?

    Equity release interest works by accumulating on your lifetime mortgage loan balance using a compound interest method.

    This means you don’t need to make any repayments until the property is sold, you move into care, or pass away.

    A key aspect to remember is how compound interest can cause the loan balance to grow substantially over time.

    How Does Compound Interest Affect Your Equity Release Plan?

    Compound interest affects your equity release plan by increasing the total amount repayable over time, reducing the remaining home equity available to heirs.

    The interest is calculated not just on the initial loan amount but also on the accumulated interest from previous periods.

    This effect of interest compounding means that the longer your plan runs, the larger the final amount owed becomes.

    Which Is the Better Option Between Fixed and Variable Interest Rates?

    The better option between fixed and variable interest rates depends on your risk tolerance and financial goals, with fixed rates offering stability and variable rates potentially providing savings if rates decrease.

    These are two options borrowers get to choose from when selecting a plan. 

    A quick comparison:

    • Fixed Interest Rate: Your interest rate stays constant for the loan’s duration, offering clear foresight into the final amount owed. This stability assures certainty in financial planning, though it also means missing out on potential savings if market rates fall significantly.
    • Variable Interest Rate: Your interest rate can change over time. This type of rate can be riskier for borrowers, as they may end up owing more than they anticipated.

    The interest on an equity release product is not necessarily paid off during the lifetime of the borrower. 

    Instead, it is typically paid off when the property is sold, either when the borrower moves into long-term care or passes away.

    APR vs. MER: Understanding the Differences

    APR (Annual Percentage Rate) and MER (Mortgage Effective Rate) are both financial acronyms that represent different ways of calculating interest, with APR showing the yearly interest cost and MER including compound interest, affecting the total cost of borrowing.

    The difference between the two:

    • The APR (Annual Percentage Rate) reflects a loan’s yearly cost, incorporating interest and all related fees. It’s a critical tool for comparing loan products, offering a standardized basis to evaluate the total costs of different loans beyond mere interest rates.
    • The MER (Monthly Equivalent Rate) translates the APR into a monthly interest rate, aiding borrowers in grasping their monthly interest obligations. It’s particularly valuable when interest compounds or is calculated more frequently than once a year.

    What about AER?

    AER stands for ‘Annual Equivalent Rate’ and is typically used for savings accounts. 

    It is the rate of interest that would be earned on the savings account if the interest was paid and compounded annually. 

    How Can You Secure the Best Rates in 2024?

    To secure the best rates in 2024, it’s essential to:

    1. Compare Multiple Lenders: Rates and conditions differ, so comparing offers is key.
    2. Stay Updated on Market Conditions: Interest rates fluctuate with the market, affecting what lenders offer.
    3. Consult a Financial Advisor: A specialist can tailor advice to your situation, helping you understand how your unique circumstances and the type of equity release product chosen impact the rates you can obtain.
    4. Consider the Whole Package: Look beyond just the interest rates; fees, flexibility, and the lender’s reputation are also important.

    Remember, the offered rate is calculated based on your specific circumstances and the chosen product type.

    Therefore, recognizing the factors influencing the offered rate is critical, as the best rates vary with the mortgage’s length and type.

    * While we regularly review our rates, they may have changed since our last update. Consulting with a financial advisor who specializes in equity release can offer insights into the best options currently available in the market, ensuring you make a well-informed decision.

    How Can You Compare Equity Release Interest Rates Effectively?

    You can compare equity release interest rates by focusing on the APR to understand the total cost, and the MER for insight into monthly interest costs.

    Consider the trade-offs between fixed rates, which offer stability, and variable rates, which can provide potential savings.

    Essential to making informed decisions is seeking personalized advice from an independent financial advisor.

    Strategies to Secure Lower Interest Rates

    To secure lower rates on equity release, consider these strategies:

    1. Shop Around: Compare offers from various providers to identify the most favorable rates and terms.
    2. Negotiate: Engage with providers to see if they can offer better terms or promotions for new customers.
    3. Opt for a Lower LTV Ratio: A lower Loan-to-Value ratio can lessen the lender’s risk, potentially leading to lower interest rates.

    Be mindful that achieving a lower interest rate may not always be feasible. It’s crucial to weigh all costs and risks linked to equity release products before deciding.

    Which Equity Release Interest Rate Calculator Is Best for Your Financial Planning?

    The equity release interest rate calculator best for financial planning is an interest rate calculator offering detailed insights, including how interest accumulates monthly and annually.

    Choose calculators that enable adjustments to rates and term lengths, facilitating a clear understanding of their impact on the total debt.

    This aids in comprehensively assessing the long-term effects of your plan.

    EI Average House Price Comparison

    How Do Average Equity Release Rates Vary by Age in the UK?

    The average equity release rates in the UK can vary depending on several characteristics, including the homeowner’s age, indirectly. 

    How does that work?

    The older the borrower, the more they are typically allowed to borrow through equity release.3 

    This could indirectly affect the rate, as bigger loans could be subject to higher figures to make up for the lender’s increased risk.4

    What Influences Equity Release Mortgage Rates and Market Trends?

    Understanding the current state of equity release rates in 2024 requires awareness of several key factors that influence these rates in the UK:

    1. Market Conditions: The overall economic climate, including the Bank of England’s base rate and inflation levels, significantly affects equity release rates. Economic stability or growth often leads to higher rates, while rates may decrease in a struggling economy to encourage borrowing.
    2. Personal and Property Factors: The value of your property, your age, health, and lifestyle choices can impact the terms offered. Typically, higher loan-to-value ratios and older borrowers might see increased rates due to the greater amount they can borrow.
    3. Lender Strategies and Product Features: Lenders’ competitive strategies and the specific features of equity release products, like Inheritance Protection or projections of home value, also play a role. Additionally, though a poor credit history may not disqualify you from equity release, it could restrict access to more favorable rates.
    4. Current Trends: Observations from the Equity Release Council indicate a trend of increasing plan adoption as interest rates begin to show a slight decrease, reflecting a dynamic and responsive market.

    When considering equity release in Jun 2024, it’s crucial to not only focus on securing lower rates but also to consider the comprehensive costs involved, including setup fees and potential early repayment charges.

    How Is Interest Repaid on Equity Releases in the UK?

    In the UK, equity release interest is usually repaid from the sale proceeds of the property upon the borrower’s death or entry into long-term care.

    While regular interest payments aren’t mandatory for most plans, the interest compounds over time, increasing the total loan amount.

    From May 2022, new lifetime mortgages must offer the option for penalty-free interest payments, allowing borrowers to potentially reduce the debt over the loan’s life.10

    Common Questions

    How Do Equity Release Interest Rates Compare to Regular Mortgage Rates?

    Will Interest Rates Change in 2024?

    What Is the Impact of Interest Rates on Your UK Equity Release Plan?

    What Determines Your Interest Rate in the UK?

    Are Variable Interest Rates Currently Available for Equity Release?

    How Long Does It Take to Secure an Equity Release Plan With a Low Interest Rate?

    How Does Inflation Affect Equity Release Interest Rates?

    Are Equity Release Interest Rates Higher Than Traditional Mortgage Rates?

    Can Making Interest Payments on My Equity Release Plan Reduce the Amount Owed?

    How Often Are Equity Release Interest Rates Reviewed in the UK?

    How Do Equity Release Rates Compare Across Different UK Providers?

    How Do Figures Vary by Location Within the UK?

    How Can My Health Impact the Equity Release Interest Rate I Am Offered in the UK?

    Will Equity Release Interest Rates Fall?

    Which Companies Offer the Best Equity Release Rates in the UK?

    What Are the Current Lifetime Mortgage Interest Rates in the UK?

    Concluding Insights

    Interest rates play a crucial role in determining the cost and value of equity release plans, influenced by product features, borrower’s health, and loan amount.

    To find the best rates, borrowers should compare providers, assess fixed versus variable rates, and seek unbiased financial advice.

    Awareness of risks like negative equity and inheritance impact is essential.

    Making informed decisions requires understanding these factors and the terms of equity release products.

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